The blue chip Dow Jones industrial average lost 69.93 points, or 0.71%, to 9,721.79. The broader Standard & Poor's 500 index eased 10.75 points, or 1.02%, to 1,039.32. The tech-heavy Nasdaq composite index ended down 37.78 points, or 1.94%, to 1,912.36.
Tech earnings were the focus of investor disappointment on Friday. Internet swap-meet company eBay (EBAY
) shares were under pressure after released earnings following Thursday's close that met the low end of its guidance. Still, earnings came in at $103.3 million, or 16 cents per diluted share, compared with its year-earlier profit of $61 million, or 11 cents per diluted share. Revenues rose to $530.9 million from $288.8 million.
After the close of trading in Thursday's session, server maker Sun Microsystems (SUNW
) reported a wider quarterly loss amid weak demand for its servers and tough competition. Sales fell for the 10th consecutive quarter.
Nextel Communications (NXTL
) said income in the quarter fell due to charges for debt retirement, but revenues rose and the wireless company raised guidance on strong customer demand.
Advanced Micro Devices (AMD
) shares moved higher after the chipmaker posted a smaller than expected third quarter loss on an 88% sales rise. AMD says it had strong sales growth in its microprocessor and Flash memory business lines, and that it is tightly managing its expense structure.
From the Dow, United Technologies (UTX
) reported earnings after Thursdays's close that topped estimates. The maker of Sikorsky helicopters, Pratt & Whitney jet engines and Otis Elevators earned $639 million, or $1.27 per share, in the three-month period that ended Sept. 30.
Third quarter earnings reports will continue to stream in next week. During the session Monday, investors will have earnings from Dow stalwarts Citigroup (C
) and 3M (MMM
), as well as tech names Check Point Software (CHKP
), and Lexmark (LXK
After Monday's market close, Texas Instruments (TXN
), Cendant (CD
), and Horizon Health (HORC
) are set to report.
On the economic front, the coming week will be quiet. Leading indicators will be reported Monday. According to a survey by economic research firm MMS International, economists expect a a flat reading.
The Treasury budget is tentatively scheduled for Monday as well, but the fiscal-year-end report is almost always delayed. Initial claims, weekly chain store sales, and MBA figures round out the rest of the week. Several Federal Reserve speakers, including Chairman Alan Greenspan on Thursday, will speak next week.
Treasuries staged a mini-rally Friday despite a strong housing report and better than expected consumer sentiment update. Longer-dated issues gained back some lost territory after a particularly painful week of losses. Languishing stocks helped bolster Treasuries. However, a corrective pop could be short-lived, notes MMS, as profit-taking on shorts into the weekend masks the broader bearish sentiment.
Investors also got more economic data Friday that should have been bullish for equities. The University of Michigan's Consumer Sentiment came in higher than expected at 89.4 versus expectations of 88.0 to 88.5.
U.S. housing starts surged 3.4% to a 1.888 million pace in September, defying expectations of a decline. August's pace was revised higher to a 1.826 million from 1.820 million. Gains were broadbased with 3 of the 4 regions posting gains, including the Northeast, which rebounded 15.1% after an 18.3% decline. "The data are yet another sign of the strong economy," says MMS International.
European stocks finished mostly lower Friday as poor results from Netherlands-based food retailer Ahold (AHO
) put a cap on strength. London's Financial Times-Stock Exchange 100 index edged up 4.30 points, or 0.10%, to 4,344.00. Germany's DAX index slumped 63.69 points, or 1.77%, to 3,514.33. In Paris, the CAC 40 shed 3.77 points, or 0.11%, to 3,353.72.
Asian stocks finished higher. Japan's Nikkei 225 index added 12.74 points, or 0.12%, to finish at 11,037.89, down from early morning highs due to profit taking. In Hong Kong, the Hang Seng index increased 16.92 points, or 0.14%, to 12,044.49.